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Soranno v. Heartland Payment Systems, LLC

United States District Court, D. New Jersey

July 26, 2019

JOSEPH SORANNO, individually and on behalf of all others similarly situated Plaintiffs,
v.
HEARTLAND PAYMENT SYSTEMS, LLC, successor in interest to HEARTLAND PAYMENT SYSTEMS, INC., Defendant.

          OPINION

          Hon. Freda L. Wolfson Chief United States District Judge.

         Plaintiff, Joseph Soranno (“Soranno”), filed suit individually and on behalf of putative class members, against defendant, Heartland Payment Systems, LLC (“Heartland”), for breach of contract (Count One), breach of the implied covenant of good faith and fair dealing (Count Two), and unjust enrichment (Count Three). Soranno, a former Heartland employee, brought suit against Heartland over certain commissions Soranno alleges were not paid. In the instant matter, Heartland moves to dismiss the claim for the breach of the implied covenant of good faith and fair dealing. Because Soranno does not sufficiently allege that claim, Heartland's motion to dismiss Count Two is GRANTED.

         BACKGROUND

         The following facts are taken from the Complaint and taken as true for the purposes of this motion. Heartland is in the business of providing processing services to merchants for payment card transactions. Complaint. (“Compl.”), at ¶ 1. Heartland hired Soranno in January 2007 as a Relationship Manager, a commission-only sales position. Id. at ¶ 2, 32. Soranno sold Heartland's processing services for American Express (“Amex”) card payment transactions to merchants, and for doing so, earned recurring monthly commissions. Id. at ¶ 4. All commission-based positions at Heartland are eligible to attain “Vested” status, which permits employees to continue earning commissions even after their employment with Heartland ends. Id. at ¶ 34.

         In February or March of 2008, Soranno allegedly achieved Vested status, and he executed Heartland's Vested Relationship Manager Agreement. Id. at ¶ 36. According to Soranno, in April 2008, he took a new position as a Territory Manager, which required him to execute Heartland's Territory Manager Agreement. Id. at ¶ 38. Both executed agreements (hereinafter “VA”) are interchangeable. Id. at ¶ 45. Soranno alleges that the VA entitled him to receive commissions for his merchants' transactions processed through Heartland after his employment at Heartland ended. Id. at ¶¶ 6, 34. However, the VA also provided that Sorannos's commissions would be paid consistent with Heartland's Sales Policy Manual and that the manual could be amended periodically. Id. at ¶ 7.

         Soranno voluntarily resigned from his position with Heartland in December 2012, and he continued to receive his commissions under the VA in accordance with the Sales Policy Manual. Id. at ¶¶ 49, 50. In 2014, Soranno avers that Amex changed its pricing for card transactions and Heartland converted merchants to the new pricing. Id. at ¶ 51. In 2015, Heartland allegedly revised its Sale Policy Manual to reflect a new commission structure for Amex processing services under the new pricing. Id. at ¶¶ 60-61. As a result, Soranno acknowledges that he experienced an increase in the value of his commissions for December 2014 and January 2015, which Soranno maintained was an indication that Heartland was receiving more revenue from merchants under the new pricing. Id. at ¶ 63.

         During the price conversion, Soranno was subject to a restrictive covenant in the VA prohibiting Soranno from soliciting any of Heartland's merchants. Id. at ¶ 52. Then, in February 2015, Soranno alleges that Heartland ceased commission payments to him and class members, without warning, notice, or explanation, in violation of the VA. Id. at ¶¶ 65, 96. However, Soranno alleges that Heartland continued to pay commissions to its then-active sales employees who were subject to the same sales policies. Id. at ¶¶ 67, 68.

         Soranno asserts that, in bad faith and with improper motive, Heartland failed to give warning or notice to Soranno that Heartland would discontinue commissions. Id. at ¶ 74. Heartland, according to the Complaint, did not communicate the Amex price change and amendments made to the sales policies, and concealed the reasons for terminating the commissions.[1] Id. at ¶¶ 76, 133.

         Moreover, Soranno claims that Heartland demonstrated improper motive through its disparate treatment of former and active employees because it continued to pay commissions on identically price-converted merchant accounts to its active sales employees, who were governed by the same Sales Policy Manual. Id. at ¶¶ 78, 137. Soranno also alleges that Heartland stopped paying the commissions because it was facing competition from other payment processing companies, and that Heartland's founder and former CEO, Robert O. Carr, labeled the new pricing program as a new product altogether in order to render subsequent transactions ineligible for commission payments post-employment. Id. at ¶¶79, 86. In addition, Soranno claims that Heartland's executive managers, who were also shareholders, were attempting to sell or merge Heartland, and therefore, had a financial incentive to reduce commissions to make Heartland a better candidate for a merger or acquisition. Id. at ¶¶ 81-82.

         On October 15, 2018, Soranno brought this putative class action against Heartland for breach of contract (Count One), breach of the implied covenant of good faith and fair dealing (Count Two), and unjust enrichment (Count Three). Heartland moves to dismiss Count Two (breach of the duty of good faith and fair dealing) under Rule 12(b)(6).

         DISCUSSION

         I. Standard of Review

         Under Fed.R.Civ.P. 12(b)(6), a complaint may be dismissed for “[f]ailure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When reviewing a motion to dismiss on the pleadings, courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quotations omitted). Under this standard, the factual allegations set forth in a complaint “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Indeed, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “[A] complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to ‘show' such an entitlement with its facts.” Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009).

         However, Rule 12(b)(6) only requires a “short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the . . .claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. The complaint must include “enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Phillips, 515 F.3d at 234 (citation and quotations omitted); Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) (“[A] claimant does not have to set out in detail the facts upon which ...


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